Template for notifying/consulting on Article 124 CRR
Template for consulting the EBA and notifying the ECB and ESRB on setting higher risk weights for immovable property or applying stricter criteria than those set out in Article 125(2) and Article 126(2) CRR
Please send this template to
· when notifying the ESRB;
· when notifying the ECB;
· when notifying the EBA.
Emailing this template to the above-mentioned addresses constitutes an official notification, no further official letter is required. In order to facilitate the work of the notified authorities, please send the notification template in a format that allows electronically copying the information.
1. Consulting/notifying national authority1.1 Name of the consulting/notifying authority / If several designated authorities, please mention all of them.
2. Scope of the consultation/notification and description of the measure
2.1 Exposures secured by mortgages on residential property / a) Do you intend to set higher risk weights for exposures secured by mortgages on residential property?
b) If yes, which risk weight would you set? Please specify the new risk weight (between 35% and 150%).
c) Do you intend to apply stricter criteria than those set out in Article 125(2) CRR (exposures fully and completely secured by mortgages on residential property)?
d) If yes, which additional or stricter criteria would you set?
2.2 Exposures secured by mortgages on commercial immovable property / e) Do you intend to set higher risk weights for exposures secured by mortgages on commercial immovable property?
f) If yes, which risk weight would you set? Please specify the new risk weight (between 50% and 150%).
g) Do you intend to apply stricter criteria than those set out in Article 126(2) CRR (exposures fully and completely secured by mortgages on commercial immovable property)?
h) If yes, which additional or stricter criteria would you set?
2.3 Other relevant information / - Any other relevant information (e.g. interaction with other supervisory measures, description of any other measures addressing the same risk).
3. Timing of the measure
3.1 Timing of the Decision / What is the date of the official decision? For SSM countries when notifying the ECB: provide the date when the decision referred to in Article 5 of the SSMR shall be taken.
3.2 Timing of the Publication / What is the date of publication of the notified measure?
3.3 Disclosure / Information about the communication strategy of the notified measure to the market.
3.4 Timing of the application / What is the intended date of activation (i.e. as of which date shall the measure be applicable)?
3.5 Frequency/review / - When did the Member State last change the risk weights for exposures secured by mortgages on residential property? Which change has been applied?
- When did the Member State last change the risk weights for exposures secured by mortgages on commercial immovable property? Which change has been applied?
- How long will the higher risk weights apply? When will the decision be reviewed?
4. Reason for setting higher risk weights or stricter criteria than those set out in Article 125(2) or Article 126(2) CRR
4.1 Regulatory context / - What were the risk weights applied to exposures secured by mortgages on residential property and commercial immovable property before January 2014?
- Is the objective of setting of higher risk weights or stricter criteria under Article 124 CRR a continuation of the previous regulatory treatment of residential and commercial property exposures?
- Do you apply a similar measure in the context of real estate exposures under Article 164 CRR?
4.2 Risk weights versus actual risks / - Does the risk weight of all residential or commercial property segments, which are fully and completely secured by mortgages on residential property or commercial immovable property, reflect the actual risks related to these exposures?
- If not, specify the reasons and put your answers in perspective to the real estate markets of other European countries.
4.3 Motivation / a) Loss experience
- Give details about the loss experience in the real estate market of the Member State that justify the setting of higher risk weights or the application of stricter criteria than those in Article 125(2) and Article 126(3) CRR.
- Which of the data mentioned in Article 101 CRR did you use?
- Which other indicators have been taken into account?
b) Forward-looking real estate market developments
- Describe the forward-looking real estate market developments which justify the setting of higher risk weights or application of stricter criteria.
- Provide the indicators and any other relevant information on the basis of which the assessment is made. If possible please provide the data (preferably an Excel-file).
c) Financial stability considerations
- Which are the financial stability considerations that were taken into account?
- Provide the indicators on the basis of which the assessment is made. If possible please provide the data (preferably an Excel-file).
5. Cross-border and cross-sector impact of the measure
5.1 Assessment of cross-border effects and the likely impact on the internal market
(Article 133(11)(d) of the CRDIV and Recommendation ESRB/2015/2) / Assessment of the cross-border effects of the implementation of the measure.
a. Assessment of the spillover channels operating via risk adjustment and regulatory arbitrage. The relevant indicators provided in Chapter11 of the ESRB Handbook on Operationalising Macro-prudential Policy in the Banking Sector[1] can be used.
b. Assessment of:
o cross-border effects (leakages and regulatory arbitrage) of the implementation of the measure in your own jurisdiction (inward spillovers); and
o cross-border effects on other Member States and on the Single Market of the measure (outward spillovers).
5.2 Assessment of leakages and regulatory arbitrage within the notifying Member State / Referring to your country's specific characteristics, what is the scope for "leakages and regulatory arbitrage" in your own jurisdiction (i.e., circumvention of the measure/leakages to other parts of the financial sector)?
6. Miscellaneous
6.1 Contact person(s) at consulting/notifying authority / Contact person(s) for further inquiries (name, phone number and e-mail address
6.2 Any other relevant information
2
[1] Available on the ESRB’s website at www.esrb.europa.eu.